Friday 29 Mar 2024
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KUALA LUMPUR (Oct 23): Malaysia's current account balance is set to post a lower surplus of 1.5% to 2.5% of gross national income (GNI) this year and at 0.5% to 1.5% in 2016, on the back of a weak ringgit, plunging commodity prices and softer external demand.

The current account surplus was 4.4% of GNI last year.

According to the Economic Report 2015/16 prepared by the Finance Ministry, surplus in the goods and services account is expected to narrow sharply to RM75.1 billion this year, compared with RM102.2 billion in 2014.

That's because the deficit in the services account is expected to widen to RM14.7 billion in 2015 from RM11.2 billion in 2014, on account of a lower surplus in the travel account at RM29.8 billion from RM33.5 billion.

"Despite the gains from a weak ringgit, the unfortunate airline incidents, natural calamities and security concerns continue to dent tourist arrivals," the report wrote.

It added, however, that the relaxation of visa requirements for Chinese tourists on group tours effective October 2015 until March 2016 is expected to support growth in the tourism industry.

Continued reliance on foreign freight services will see the transport account remaining in deficit at a projected RM25.8 billion this year compared with RM26.1 billion in 2014.

Meanwhile, the primary income account is expected to register a lower deficit of RM33.2 billion this year compared with RM37.3 billion in 2014.

Net outflows in the secondary income account are expected to be larger at RM18.5 billion from RM17.6 billion in 2014, due to higher remittances by foreign workers from Indonesia, Nepal, Bangladesh, Myanmar and India.

Outward direct investment was registered at RM27.6 billion during the first half of 2015 (1H15), supported by higher extension of intercompany loans by Malaysian companies to their affiliates mainly for acquisitions in the oil and gas sector.

Foreign direct investment stood at RM22.4 billion in 1H15, driven by higher injections of equity capital and reinvestments by multinational companies.

 

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